Declining economic prospects abroad and a growing US economy has led to foreign capital flowing into the US multifamily sector, especially from Canada, China and Singapore.
The solid footing of the US economy isn’t just benefiting domestic market players; it’s also spurring investments from abroad. Industry data show that the volume of foreign capital which was used to fund US CRE transactions surged year over year, including notable bumps for such property sectors as apartments. It appears that foreign investors are looking past the rising labor costs associated with apartment construction and buying into a sector which is in high demand.
An analysis by CBRE shows that investors from foreign countries accounted for $13.65 billion, or about 8%, of the $174.5 billion of apartment property sales that took place in the United States last year. While the 8% figure isn’t too large, the brokerage giant noted that foreign investors have pumped $50.1 billion into the US multifamily sector since 2014. Last year’s volume was nearly 50% greater than the previous year, when foreign investors accounted for $9.2 billion, or 6%, of the $154.2 billion of apartment property sales that took place.
CBRE found that foreign capital into the US multifamily sector has grown by 241% to $50.1 billion since 2014. During each of the 10 years prior to 2014, foreign capital amounted to no more than roughly $4 billion of the capital that found its way into the multifamily sector.
Canadian investors were the biggest foreign buyers of US apartment properties last year, accounting for $8.6 billion, or 63%, of all inbound foreign capital. However, that was equal to less than 5% of all deal volume in the sector.
Among the more active Canadian players in the sector is Starlight Investments, a Toronto investment manager that sponsors a number of funds that specifically target US apartment properties. It owns 38 properties with 12,000 units in 13 markets. It most recently paid $120 million for the 400-unit Broadstone Montane apartments in the Denver suburb of Parker, Colorado.
Yes, instead of Snake Pliskin ESCAPING from New York, foreign capital is escaping TO New York and other US metro areas.